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Highlands & Lowlands (HLB)

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Wednesday 25 May, 2005

Highlands & Lowlands

Interim Results

Highlands & Lowlands Berhad
25 May 2005


                                              HIGHLANDS & LOWLANDS BERHAD
                                                 (Company No : 24817H)
                                               (Incorporated in Malaysia)

                    INTERIM REPORT ON CONSOLIDATED RESULTS FOR THE FIRST QUARTER ENDED 31 MARCH 2005

I. Unaudited Condensed Consolidated Income Statements


                                                       First Quarter                    Cumulative Quarter
                                                  Current          Preceding          Current            Preceding
                                                   Year               Year              Year               Year
                                     Note       1.3.2005           31.3.2004         31.3.2005           31.3.2004
                                                  RM'000             RM'000            RM'000             RM'000

 Revenue                               8          93,221             90,068           93,221              90,068        
                                              ===========        ===========      ===========         ===========
                                                                   
 Profit from operations                8          18,689             26,848           18,689              26,848        
 Investment income                                   109                 83              109                  83

 Finance income                                    9,026              9,380            9,026               9,380        
        
                                                   2,737              1,538            2,737               1,538        
Share of results of associated                -----------        -----------      -----------         -----------
companies

 Profit before tax                                30,561             37,849           30,561              37,849        
 Income tax                           18         (9,279)            (9,806)          (9,279)             (9,806)
                                              -----------        -----------      -----------         -----------
Profit after tax attributable to                                                        
shareholders                                      21,282             28,043           21,282              28,043        
                                              ===========        ===========      ===========         ===========
Earnings per share (sen)              
- Basic                               25             3.5                4.6              3.5                 4.6
                                              ===========        ===========      ===========         ===========


The Condensed Consolidated Income Statements should be read in conjunction with 
the audited Financial Statements for the year ended 31 December 2004 and the 
accompanying explanatory notes attached to the interim financial statements.


II. Condensed Consolidated Balance Sheets

                                                                      Unaudited                Audited
                                                                        As at                   As at
                                                                      31.3.2005              31.12.2004
                                                      Note              RM'000                  RM'000

 Property, plant and equipment                         9              1,463,393               1,470,521
 Land held for development                                               20,478                  20,478
 Investment in associated companies                                     148,991                 163,359
 Loan to an associated company                                          185,000                 185,000
 Other investments                                                        1,332                   1,332
 Trade receivables                                                       23,067                  23,067
                                                                    -----------              -----------
                                                                      1,842,261               1,863,757
                                                                    -----------              -----------
 Current assets
     Inventories                                                         18,231                  11,883
     Trade and other receivables                                         90,254                 107,673
     Income tax recoverable                                               1,516
                                                                                                    364
     Amount due from holding company                                    521,561                 514,036
     Investment stocks                                                    5,003                   6,081
     Marketable securities                                               20,840                  21,084
     Deposits, bank and cash balances                                   300,478                 250,490
                                                                    -----------              -----------
                                                                        957,883                 911,611
                                                                    -----------              -----------

Current Liabilities
     Trade and other payables                                           32,144                   26,823
     Amount due to holding company                                      28,046                   26,112
     Deferred income                                                     1,304                    1,739
     Taxation                                                            7,117                    9,428
                                                                    -----------              -----------
                                                                        68,611                   64,102
                                                                    -----------              -----------
 Net Current Assets                                                    889,272                  847,509
                                                                    -----------              -----------
                                                                     2,731,533                2,711,266
                                                                    ===========              =========== 

 Capital and Reserves
     Share capital                                                     302,168                  302,168
     Reserves                                                        2,297,042                2,275,760
                                                                    -----------              -----------
      Shareholders' funds                                             2,599,210                2,577,928
                                                                    -----------              -----------

 Long-term and Deferred Liabilities
     Deferred income                                                     2,561                    2,561
     Retirement benefits                                                 3,252                    3,157
     Deferred tax liabilities                                          126,510                  127,620
                                                                    -----------              -----------
                                                                       132,323                  133,338
                                                                    -----------              -----------
                                                                     2,731,533                2,711,266
                                                                    ===========              =========== 
 Net Tangible Assets per Share (RM)                                       4.30                     4.27
                                                                    ===========              =========== 

The Condensed Consolidated Balance Sheets should be read in conjunction with the 
audited Financial Statements for the year ended 31 December 2004 and the 
accompanying explanatory notes attached to the interim financial statements.


III.  Condensed Consolidated Statement of Changes in Equity for the First Quarter ended 31 March 2005


                                                ---------Non-distributable-------     Distributable
                                       Share       Share     Revaluation     Capital       Retained
                                      capital     premium      reserve       reserve       profits         Total
                                      RM'000      RM'000        RM'000       RM'000         RM'000        RM'000
3 Months Ended
31 March 2005
At 1 January 2005                     302,168       4,371        540,875      35,553        1,694,961   2,577,928       
     
Transfer from revaluation to
revenue reserve                             -           -        (2,485)           -            2,485           -
                                   -------------------------------------------------------------------------------
                                      302,168       4,371        538,390      35,553        1,697,446   2,577,928
Profit for the period                      -            -              -           -           21,282      21,282
                                   -------------------------------------------------------------------------------
At 31 March 2005                      302,168       4,371        538,390      35,553        1,718,728   2,599,210       
                                   ===============================================================================
                                                    
3 Months Ended
31 March 2004
At 1 January 2004                     302,168       4,371        558,472      35,553        1,631,270   2,531,834
Transfer from revaluation to
revenue reserve                             -           -        (2,364)           -            2,375          11
                                   -------------------------------------------------------------------------------
                                      302,168       4,371        556,108      35,553        1,633,645   2,531,845
Profit for the period                       -           -              -           -           28,043      28,043
                                   -------------------------------------------------------------------------------
At 31 March 2004                      302,168       4,371        556,108      35,553        1,661,688   2,559,888       
                                   ===============================================================================
     
                                                    
The Condensed Consolidated Statement of Changes in Equity should be read in 
conjunction with the audited Financial Statements for the year ended 
31 December 2004 and the accompanying explanatory notes attached to the interim 
financial statements.

IV.   Condensed Consolidated Cash Flow Statements

                                                                               3 Months Ended
                                                                        31.3.2005           31.3.2004
                                                                         RM'000              RM'000
 Operating activities
 Cash from operations                                                    48,402             116,015
 Interest received                                                        7,490               7,888
 Tax paid                                                              (12,572)            (12,518)
                                                                    -----------         -----------
 Net cash inflow from operating activities                               43,320             111,385
                                                                    -----------         -----------

 Investing activities
 Property, plant and equipment
      - purchases                                                       (3,622)             (6,228)
 Other investments
     - purchases                                                        (1,100)             (7,137)
     - disposals                                                          1,047               1,414
 Dividends received                                                      15,934                  61
 Net change in amount due from holding company                          (5,591)               5,923
 Net change in amount due from an associated company                          -              13,471
                                                                    -----------         -----------
 Net cash inflow from investing activities                                6,668               7,504
                                                                    -----------         -----------

 Net increase in cash and cash equivalents                               49,988             118,889
 Cash and cash equivalents at 1 January                                 250,490              88,356
                                                                    -----------         -----------
 Cash and cash equivalents at 31 March                                  300,478             207,245
                                                                    ===========         ===========

The Condensed Consolidated Cash Flow Statements should be read in conjunction 
with the audited Financial Statements for the year ended 31 December 2004 and 
the accompanying explanatory notes attached to the interim financial statements.


Part A - Explanatory Notes Pursuant to MASB 26
     
1.   Basis of Preparation

     The interim financial statements are unaudited and have been prepared in 
     accordance with the requirements of MASB 26, Interim Financial Reporting' 
     and paragraph 9.22 of the Listing Requirements of Bursa Malaysia Securities 
     Berhad.

     The accounting policies, methods of computation and presentation adopted by 
     the Group for the interim financial statements are consistent with those 
     adopted in the annual financial statements for the year ended 31 December 
     2004.

     The interim financial statements should be read in conjunction with the 
     audited financial statements for the year ended 31 December 2004.  These 
     explanatory notes attached to the interim financial statements provide an 
     explanation of events and transactions that are significant to an 
     understanding of the changes in the financial position and performance of
     the Group since the financial year ended 31 December 2004.

2.   Auditors' Report on Preceding Annual Financial Statements

     The auditors' report on the financial statements for the year ended 
     31 December 2004 was not qualified.

3.   Comments about Seasonal or Cyclical Factors

     The plantation operation of the Group is affected by seasonal production of 
     fresh fruit bunches.

4.   Material Items that affect the Financial Statements

     There were no material items affecting the financial statements during the 
     financial period ended 31 March 2005.

5.   Changes in Accounting Estimates

     There were no changes in estimates of amounts reported in prior interim 
     periods of the current financial year or in prior financial years that have 
     a material effect on the current quarter.

6.   Debt and Equity Securities

     There were no issuance and repayment of debt and equity securities, share 
     buy-backs, share cancellations or shares held as treasury shares and resale 
     of treasury shares for the financial period ended 31 March 2005.

7.   Dividends Paid

     No dividends were paid during the financial period ended 31 March 2005.

    

8.   Segmental Information

     Segment information is presented in respect of the Group's business 
     segment.


                                                             First Quarter                    Cumulative Quarter
                                                       Current          Preceding          Current         Preceding
                                                        Year              Year             Year              Year
                                                      31.3.005          31.3.2004       31.3.2005          31.3.2004
                                                       RM'000            RM'000            RM'000           RM'000
        Revenue
        Plantation and agricultural services           93,200            89,902           93,200            89,902
        Investment dealing                                 21               166               21               166
                                                  -----------       -----------      -----------       -----------
                                                       93,221            90,068           93,221            90,068      
                                                  ===========       ===========      ===========       ===========
        Profit From Operations
        Plantation and agricultural services           19,015            23,589           19,015            23,589
        Compulsory land acquisitions                      268             1,945              268             1,945
        Investment dealing                              (594)             1,314            (594)             1,314
                                                  -----------       -----------      -----------       -----------
                                                       18,689            26,848           18,689            26,848      
                                                  ===========       ===========      ===========       ===========
         
                                                                                          
9.   Carrying Amount of Revalued Assets

     The valuations of property, plant and equipment have been brought forward 
     without amendment from the financial statements for the year ended 
     31 December 2004.

10.  Subsequent Events

     There were no material events subsequent to the current quarter.

11.  Changes in Composition of the Group

     There were no changes in the composition of the Group during the financial 
     period ended 31 March 2005.

12.  Changes in Contingent Liabilities and Contingent Assets

     There were no changes in contingent liabilities or contingent assets since 
     the last annual balance sheet date as at 31 December 2004.

13.  Capital Commitments

     The amount of commitments for the purchase of property, plant and equipment 
     not provided for in the financial statements as at 31 March 2005 are as 
     follows:


                                                                      RM'000

    Authorised but not contracted for                                 20,662
    Contracted but not provided for                                    9,102
                                                                 -----------
                                                                      29,764
                                                                 ===========     


Part B - Explanatory Notes Pursuant to Appendix 9B of the Listing Requirements 
of Bursa Malaysia Securities Berhad.


14.  Performance Review

     For the three months ended 31 March 2005, the Group recorded a profit 
     before tax of RM30.6 million, a decrease of RM7.2 million as compared with 
     that for 2004 of RM37.8 million.

     The lower profit of the Group for the period under review was attributable 
     largely to lower prices realised for palm oil despite the higher production 
     of fresh fruit bunches. The average price realised for palm oil was RM1,332 
     per tonne as compared to RM1,748 per tonne for the corresponding period of 
     2004. Production of fresh fruit bunches for the period of 217,590 tonnes 
     was higher by 56,087 tonnes (34.7%) as compared to 161,503 tonnes for the 
     corresponding period of 2004.

15.  Comments on Material Changes in Profit Before Taxation for the Current 
     Quarter as Compared with the Immediate Preceding Quarter

     The Group's profit before tax for the current quarter ended 31 March 2005 
     at RM30.6 million was lower than that recorded for the preceding quarter 
     ended 31 December 2004 of RM262.3 million, by RM231.7 million.

     The lower profit registered by the Group for the current quarter was 
     attributable largely to :
          
     i)   Gain on sale of land of RM116.3 million and gain from compulsory land 
          acquisitions of RM72.8 million, totaling RM189.1 million in the 
          preceding quarter; and
          
     ii)  Lower contribution from associated companies by RM36.7 million due to 
          higher billings by Guthrie Property Development Holding Berhad in the 
          preceding quarter.
     
16.  Current Year Prospects

     The Group's performance for the year 2005 is expected to be lower in view 
     of the lower crude palm oil prices despite higher production of fresh fruit 
     bunches.

17.  Profit Forecast or Profit Guarantee

     The disclosure requirements for explanatory notes for the variance of 
     actual profit after tax and minority interest and shortfall in profit 
     guarantee are not applicable.

18.  Income Tax

     Tax expense comprises the following :-


                                              First Quarter                          Cumulative Quarter
                                          Current           Preceding            Current            Preceding
                                           Year                Year                Year               Year
                                        31.3.2005          31.3.2004           31.3.2005           31.3.2004
                                          RM'000             RM'000              RM'000              RM'000
     Group:
     Current taxation                      9,133               7,514               9,133              7,514
     Deferred tax liabilities            (1,110)               1,690             (1,110)              1,690
     Underprovision in
         respect of prior years               -                   27                   -                 27
                                     -----------         -----------         -----------        -----------
                                           8,023               9,231               8,023              9,231
                                     -----------         -----------         -----------        -----------
     Associates:
     Current taxation                      1,252                 706               1,252                706
     Deferred tax liabilities                 20               (107)                  20              (107)             
     Overprovision in
         respect of prior years             (16)                (24)                (16)               (24)
                                     -----------         -----------         -----------        -----------
                                           1,256                 575               1,256                575
                                     -----------         -----------         -----------        -----------
                                           9,279               9,806               9,279              9,806
                                     ===========         ===========         ===========        ===========
                                                                                   
     The effective tax rate of the Group is higher than the statutory tax rate 
     due to certain expenses not allowable for income tax purposes.

19.  Sale of Unquoted Investments and Properties

     There was no sale of unquoted investments outside the ordinary course of 
     the Group's business for the period ended 31 March 2005.

20.  Quoted Securities

     a)  Total purchases and sales of quoted securities are as follows :-


                                                First Quarter                         Cumulative Quarter
                                            Current            Preceding           Current           Preceding
                                             Year                 Year              Year                Year
                                           31.3.2005           31.3.2004          31.3.2005          31.3.2004
                                            RM'000              RM'000              RM'000             RM'000
         Purchase consideration              1,100               1,819              1,100              1,819
         Disposals                           1,047                 274              1,047                274
         Gain on disposals                     148                 110                148                110
                                       -----------         -----------        -----------        -----------


     b)  Investments in quoted securities as at 31 March 2005 are as follows :-


                                                            Cost          Book Value        Market Value
                                                           RM'000           RM'000             RM'000

          Total quoted securities                          19,827           12,230             13,443
                                                      ===========      ===========        ===========               

21.  Status of Corporate Proposals Announced

     There was no corporate proposal announced but not completed as at the date 
     of this announcement.

22.  Borrowings and Debt Securities

     There were no Group borrowings and debt securities as at 31 March 2005.

23.  Off Balance Sheet Financial Instruments

     As at the date of this announcement, the Group does not have any financial 
     instruments with off balance sheet risk.

24.  Changes in Material Litigation

     As at the date of this announcement, the Group is not engaged in any 
     material litigation.

     Earnings Per Share
               
25.
     a)   Basic

          Basic earnings per share is calculated by dividing the net profit for 
          the period by the weighted average number of ordinary shares in issue 
          during the period.

                                                                        Current             Cumulative
                                                                        Quarter              Quarter
                                                                       31.3.2005            31.3.2005

          Profit attributable to shareholders (RM'000)                   21,282               21,282
          Weighted average number of ordinary shares
           in issue ('000)                                              604,336              604,336
          Basic earnings per share (sen)                                    3.5                  3.5
                                                                     ===========         ===========   

     b)  Diluted

         Not applicable.

26.  Authorisation for Issue

     The interim financial statements were authorised for issue by the Board of 
     Directors in accordance with a resolution of the Directors on 25 May 2005.



                                                          By Order of the Board
     25 May 2005                                          Moriami Mohd
     Kuala Lumpur                                         Secretary



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